Loudoun backs away from tax cut as budget discussions continue

January 16, 2013

As the annual budget cycle continues, the Loudoun County Board of Supervisors and the School Board continue to hunt for ways to trim costs, even as their members acknowledge the bleak reality of a challenging financial landscape.

In a significant recent shift, supervisors have backed away from their previously stated goal to offer county taxpayers a 3-cent reduction in their property tax rate by cutting only the county schools budget.

For the members of the all-Republican Board of Supervisors, promises of fiscal responsibility and lower taxes were at the heart of their political campaigns in the 2011 election. But local revenue challenges, paired with the ongoing federal budget battle, have led the board’s Finance, Government Services and Operations Committee to concede that a tax cut might not be affordable this year.

At a committee meeting Jan. 8, four supervisors voted to recommend that County Administrator Tim Hemstreet instead prepare a county budget reflecting an equalized tax rate, meaning that average county taxpayers would see no change in their property tax bills. Supervisor Kenneth D. “Ken” Reid (R-Leesburg) was absent for the vote.

Before the vote, Hemstreet told supervisors there had been unexpected changes to the financial projections made late last year. Although the county’s financial staff members had anticipated that property values would result in an equalized tax rate of about $1.21 per $100 of assessed value, the actual equalized rate now appears to be closer to $1.23. Ongoing uncertainty regarding federal budget discussions between Congress and President Obama are also of concern, Hemstreet said.

There is also the possibility that federal funding for Virginia Regional Transit, Loudoun’s primary provider of bus service, could be called into question, which could leave supervisors faced with either offsetting those costs or changing the bus service, Hemstreet said.

Hemstreet also noted that the School Board’s proposed budget would leave the school system potentially facing a $56 million shortfall if the county pursues the 3-cent tax cut.

Committee Chairman Ralph Buona (R-Ashburn) said it had become necessary for supervisors to reevaluate their fiscal guidance.

“What we’ve essentially done is not over-handcuffed ourselves as a board,” he said. “If we come in too tight at this point in time, we may find ourselves in a situation that we don’t want to be in.”

Pursuing an equalized rate would effectively put about $18 million to $20 million in revenue back onto the table, Chief Financial Officer Ben Mays said.

But it’s not a given that all the money would go to the schools: Several supervisors, including Buona and board Chairman Scott K. York (R-At Large), have emphasized the need to balance the additional funds among schools, transportation and public safety.

The School Board also took a step forward with its budget process Jan. 8, when it voted to adopt its Capital Improvement Program, totaling about $247 million for fiscal years 2014 through 2018.

The program includes funding for new school construction — including two elementary schools, two middle schools, one high school and a new building that would house the Monroe advanced technology academy and the Loudoun Academy of Science program. The plan includes renovations and additions to existing school facilities, as well as $8 million for turf fields at all Loudoun high schools by the end of fiscal 2017.

The School Board is scheduled to adopt its fiscal 2014 budget this month. The plan would then go before the Board of Supervisors for review next month.

Despite the decision to pursue an equalized tax rate, Supervisor Shawn Williams (R-Broad Run) emphasized at the committee meeting that the School Board should continue to work hard to find ways to trim costs.

“My support of this equalized rate is really to give the board the maximum amount of flexibility,” Williams said. “I want to just make it clear on the record that this doesn’t mean that we’re not certainly looking for the schools to come back and find all the efficiencies they possibly can.”

Caitlin Gibson covers Loudoun County for The Washington Post.
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